Thursday, April 20, 2017

Where do our landlords live?

Last week's release of tax data from the Australian taxation Office has renewed discussions about who benefits from negative gearing and whether the perk could be better spent. However, the data also produced some insights about where our landlords live. That is, the post-codes of people who declare rental income to the tax office are now recorded. Now isn't that interesting?

We've previously discussed how tenure breakdown is becoming an increasingly important electoral factor, and why all politicians should support tenants' rights. The growing number of households who are long-term renters could begin to have an impact in elections for marginal seats. It's clear from the new tax data that landlords are concentrated in particular regions, and continue to outnumber tenants in a relatively large number of spots where a high rate of owner-occupation remains the norm. However, as the demographics of New South Wales change, this will also change, potentially bringing more and more votes into play as members of the community allow their votes to be influenced by housing policy and promises.

Particularly those for whom current tax settings and regulatory frameworks do not work and are in fact harmful - namely tenants - this data should be of interest. We've made three maps exploring this data with one question in mind: where do our landlords call home? Although it is important to note that this data only records where a person reports their income - the rental income may come from an entirely different state. They might actually be someone else's landlord.

The interactive maps here can be explored by click and dragging, and zooming in and out with the + or - buttons on the screen.

First, we looked at just the raw numbers of people who declared some rental income in the 2014-15 year. Baulkham Hills (postcode 2153) was the clear leader here - 7,709 taxpayers from that area declared some rental income. Two other Western Sydney areas featured highly in this count - postcode 2145, to the west of Parramatta and postcode 2170 located around Liverpool.

The picture starts to colour in a little when we look at landlords as a percentage of all people declaring income of any form. It's important to note that even though almost all adults or near adults pay tax (for instance, through GST) not all people lodge tax returns. Tax data should be treated with some caution on account of this, but it can give us a reasonably clear picture. On this map, blue signifies where more than the national average number of landlords per tax declarant reside, and green shows where there are less than the average. The North Shore's relatively high number of landlords comes through, but Sydney's south and south west also feature strongly. In fact the two areas with the highest proportions of landlords per tax declarant are Orchard Hills and Horsley Park in the south west.
This high proportion is partly due to the relatively low numbers of people in the areas, but it could also suggest some things about how housing investment works. These areas were developed not so long ago, and new homes may have been purchased by households who already had a foothold in the property market; or they may have been purchased by first homebuyers who have since tapped into rising house prices, borrowed up and bought some more... Getting to the bottom of that would make for an interesting research project.

Finally, we looked at the number of landlords in an area compared to the number of bonds lodged with the Rental Bond Board. This gives a clearer indication of areas where landlords live compared to where they invest. Green indicates less than a 1:1 ration of landlords to tenants, which is what you would expect since there are fewer landlords than then there are tenants. Blue indicates there are more landlords than tenants in an area - indicating that these are the areas where housing is not being brought into the private rental market. In Sydney, the postcodes 2156 (Annangrove) and 2125 (West Pennant Hills) are noticible as centres for landlords, joining Orchard Hills and Horsley Park. We haven't tried to account for "rentvestors" of course who will contribute to both counts.

However across New South Wales there are a number of areas which have very high numbers but can be explained by very low numbers of both tenants and landlords - for instance postcode 2898 (Lord Howe Island) has the highest ratio of landlords to tenants in the state - at least partly because there are only 3 bonds lodged. It is still interesting to see the locations where landlords outnumber tenants, sometimes by quite a margin - and of course, this doesn't account for landlords who are also tenants themselves.

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